Stem cell transplantation offers a promising efficacious therapy for cerebral ischemia and other CNS disorders. Transplanted cells show therapeutic benefits via different mechanisms, including enhanced trophic support and the replenishment of lost cells and brain structures. Of the several cell- types considered useful candidates for cell-based therapeutics, embryonic stem (ES) cells have received a great deal of attention due to their ability to develop into neurons and non-neuronal cells both in vitro and after transplantation into the ischemic brain. Two major hurdles that have hindered the efficiency and efficacy of cell-based therapy are the insufficient survival and axonal outgrowth of transplanted cells. Moreover, and perhaps more importantly, how the transplanted cells can be directed to form correct neural networks and produce functional recovery is still unresolved. This issue is extremely clinically relevant, yet so far it has been largely ignored. Using the unique whisker-barrel cortex stroke model in rats, the present investigation incorporates novel strategies that will markedly enhance the tolerance of transplanted cells and significantly facilitate target-specific axonal growth of transplanted neural progenitors, promoting organized integration within host neural network/pathways in the ischemic brain. Specific Aim 1 will apply the well-characterized protective mechanism of hypoxic preconditioning (HP) in stem cell therapy. Mouse embryonic stem cell-derived neural progenitor cells (ESNPCs) will be HP pretreated and then tested for enhanced survival in the post-stroke brain. Specific Aim 2 will test the enhancement of axonal growth of transplanted ESNPCs that express the neuron-specific and secretable RhoA inhibitor C3 transferase. We will test the hypothesis that localized expression/delivery of C3 promotes target-specific (barrel cortex) axonal outgrowth. The directed regeneration will be further strengthened by afferent input signals generated by whisker stimulation. The morphological repair of intracortical and thalamocortical connections will be evaluated. Specific Aim 3 will be devoted to the functional assessments specific for the whisker-thalamus-barrel cortex pathway. Optical imaging, electrophysiological recordings and local glucose metabolism in the regenerated barrel cortex will provide compelling evidence for the functional recovery achieved by transplantation of HP-ESNPCs in the enriched environment. This investigation will apply some exciting progress in basic and translational research into a promising combination therapy for ischemic stroke. Our long term goal is to develop effective, safe, and feasible strategies to advance stem cell therapy into clinical applications.